SeaIntel finds forwarder volumes volatile, profits stable

The Copenhagen-based consulting firm SeaIntel said a comparison of freight forwarders and carriers between 2008 and 2012 found the volume of cargo arranged by large forwarders was more volatile than that moved by carriers.
“When times are tough and demand is dwindling, the NVOCCs (non-vessel-operating common carriers) see liftings decrease faster than carriers, and conversely see them growing faster when the market picks up,” said SeaIntel in its Sunday Spotlight newsletter.
“The advantage of this flexibility can be seen by comparing the financial results from the carriers and forwarders. As an example, the container industry is estimated to have lost around $20 billion in 2009 during the height of the financial crisis – in the same period the major NVOCCs made a profit,” the firm said
SeaIntel said its analysis found COSCO, Hanjin, Mediterranean Shipping Co., APL and Maersk Line are the five carriers that experienced the highest growth rate in lifted volumes from 2008 to 2012, while at the other end of the scale RCL, CSAV, SITC, Hapag-Lloyd and Zim have not exceeded their 2008 level yet.
It found the forwarders Hellmann Logistics, DB Schenker and Kuehne & Nagel have experienced the highest growth rate from 2008 to 2012.
Alan Murphy, chief operating officer and partner in SeaIntel, said “our analysis shows that the carriers and forwarders have grown their volumes at an almost similar pace since 2008. However, the difference is that the forwarders saw their volumes dwindle more than the carriers in 2009 and the forwarders have experienced a larger increase in volumes in 2011 and 2012, compared to the carriers.”
SeaIntel found forwarders have experienced an extremely stable development in their profit during the period, while the carriers’ development continues to be highly volatile.
"They have purchase power at the lines that individual shippers would not have on their own. The freight forwarders have very strong purchase power and are now the biggest clients of the container carriers. Kuehne + Nagel would be a bigger client than Walmart for many carriers," Murphy said. "They are reselling the service of the carriers and are both their biggest competitors and clients at the same time.
"To be a freight forwarder you need people and IT systems, which means
they are a lot less exposed and don't have the same cost base as the
carrier," he added.